New York Markets After Hours

Net income slides 20% at Pulte Homes

JohnSpence

SAN FRANCISCO (MarketWatch) -- Pulte Homes Inc. after the closing bell Wednesday said profit slipped 20% from the year-ago period as the company navigates a decelerating U.S. housing market.

The Bloomfield Hills, Mich., firm
PHM, +0.61%
reported profit of $243 million, or 94 cents a share, compared with $303.7 million, or $1.15 a share in the same quarter the previous year. Revenue was $3.36 billion versus $3.25 billion in the year-earlier quarter.

Analyst polled by Thomson First Call had seen net income of $241.6 million, or 90 cents a share, on sales of $3.3 billion.

Pulte lowered its profit outlook for 2006, after cutting it in early June on lower demand for homes. The second-largest U.S. public home builder by 2005 deliveries said net new orders in April, May and June fell 30% from the same period the prior year. Additionally, the cancellation rate for April and May rose to 27.4% from 14.8% the prior year.

The company lowered its full-year estimate to a range of $4.00 to $4.30 a share, down from its earlier forecast of $4.70 to $5 a share released in June. On Wednesday, the consensus analyst estimate was $4.44 a share.

"After several years of limited house inventory and robust demand, the supply of homes for sale continues to increase, while greater buyer uncertainty about purchasing a home at this time is being further impacted by their inability to sell existing homes and the effect higher prices and interest rates are having on overall affordability," Chief Executive Richard Dugas, Jr. said Wednesday in a statement.

Through Tuesday's close, Pulte shares are off about 24% year to date, holding up relatively better than the Dow Jones U.S. Home Construction Index
DJUSHB, +0.93%
which is down 34% over the same period. Home-building stocks have been punished by investors on worries over rising mortgage rates and slower activity in the housing market.

On Monday, Centex Corp.
CTX, +0.30%
said quarterly profit dropped 31% from the previous year and joined other builders such as D.R. Horton Inc.
DHI, +0.97%
Toll Brothers Inc.
TOL, +0.00%
and others which have cut 2006 earnings forecasts.

The group lost ground on Wednesday after the Mortgage Bankers Association said home-mortgage applications dropped 2.4% last week, matching the three-year low reached four weeks ago. See Economic Report.

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